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Accounting Essay

1301 words - 6 pages

Exam 1 Research
Xilin Song

1. Exam Question Number: 3

Facts: asymmetric information of capital market

Issue: Which of the following best illustrates the concept of asymmetric information in a capital market?

Analysis: In the article “ Transparency Financial Accounting Information and Corporate Governance” Robert and Abbie stated that “In the investigation of the economic effects of private information acquisition and dissemination, future research can consider the independent effects of the private information activities of financial analysts, institutional investors, and corporate insiders. We also think there are potentially interesting interactions to explore between ...view middle of the document...

None of the above.

Research guidance: Provide explanation with citation from the FASB’s Conceptual Framework. http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156317989

3. Exam Question Number: 8

Facts: assumption of FASB’S conceptual framework

Issue: Which of the following is an assumption in the FASB’s conceptual framework?

Analysis: Accounting to FASB’s Conceptual Framework, SFAC No. 5, “Recognition and Measurement in Financial Statements of Business Enterprises” in No. 71. It stated that: “Monetary unit or measurement scale 71. The monetary unit or measurement scale in financial statements in current practice is a nominal unit of money, that is, unadjusted for changes in purchasing power of money over time. An ideal measurement scale would be one that is stable over time. At low rates of change in general purchasing power (inflation or deflation), nominal units of money are relatively stable. Also, preparation and use of financial statements is simpler with nominal units than with other units of measure, such as units of constant general purchasing power (used, for example, in supplementary disclosures of the effects of changing prices), artificial monetary units (for example, the European Currency Unit or ECU), or units of a commodity (for example, ounces of gold).” And in No. 72 “The Board expects that nominal units of money will continue to be used to measure items recognized in financial statements. “

Conclusion
First I am looking for recognition and measurement in financial statement. Then I found out that the monetary unit is one of assumption because monetary unit is relevant, stable, widely used and to be continuing used. So the correct exam answer is C Monetary Unit.

4. Exam Question Number: 16

Facts: Harvey Kapnick’s paper “ In the Public Interest”, accounting information’s goal.
Issue: What does Harvey Kapnick propose should be the goal of accounting information?

Analysis: In the article “In the Public Interest” Harvey Kapnick mentioned that, “For the fact is that value is intuitively held to be the objective of financial statements by most users of financial statements.” And “It forgot that accounting was an economic measurement system for providing understandable information about the value and changes in value of economic resources of individual business units.”

Conclusion
These all show that accounting information’s objective or goal is to provide information about value to users. So the correct answer is B. To provide users with information about value.

5. Exam Question Number:

Facts

Issue

Analysis

Conclusion

17. HAP Inc. received payment of $15,000 for services it hasn’t yet performed as of the end of the fiscal year. The payment was recorded as revenue for the fiscal year. What entry should be recorded to correct the company’s financial statements for this issue? Ignore income taxes.
a. DR Cash $15,000; CR Sales $15,000
b. DR...

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